New York Times Will Soon Cost $2

Old Gray Lady seeking to offset slump in ad sales

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The New York Times is raising the price on the daily paper to $2 and $5 for the Sunday edition.

The New York Times is raising its newsstand prices for the third time in less than two years as a severe advertising slump forces readers to shoulder more of the costs of producing newspapers.

With the latest changes announced Tuesday, individual copies of The New York Times on Mondays through Saturdays will have doubled to $2 since July 2007.

The upcoming increase, effective June 1, will boost the Times' weekday price by 50 cents, or 33 percent, from the current price of $1.50. The Times, which has the third-highest U.S. circulation on weekdays, increased the weekday price by 25 cents during each of the previous two summers.

The New York Times also is raising the price for its Sunday edition, which is the nation's top-selling newspaper on that day. Sunday's national and Northeast editions will cost $6, an increase of $1. In the New York area, it will cost $5, also a dollar more.

Home delivery rates aren't changing for now. That means most of the Times' readers won't be affected by the June 1 increases because home delivery accounts for nearly two-thirds of the newspaper's weekday circulation and more than 70 percent of the Sunday circulation.

But the Times isn't ruling out an increase later this year, newspaper spokeswoman Diane McNulty said. The Times had raised its home delivery prices around the same time it increased newsstand prices in 2007 and 2008.

Raising the prices of newspapers is risky because it threatens to drive away readers, particularly as the Times and most other newspapers give away their stories on the Internet. The recession also has made many consumers more frugal.

But many newspapers have shown willingness to see circulation fall as long as they keep the readers most coveted by advertisers.

Among other things, the Times and other newspapers have been cutting back on discounted and third-party sales. The thinking is that readers willing to pay higher prices could end up being more valuable to advertisers because they are presumably more affluent and more engaged with newspapers.

The average sales of 395 daily U.S. newspapers, including the Times, tracked by the Audit Bureau of Circulations fell 7.1 percent from last year during the six months ending in March, the biggest decline on record.

The New York Times' weekday circulation averaged 1.04 million during the six months ending in March, a drop of more than 3 percent from last year. Before the 2007 price increase, the Times' weekday circulation stood at 1.12 million.

Although many factors are behind the circulation drop, both USA Today, the nation's largest weekday newspaper, and The New York Post have blamed higher prices for recent declines in their circulation.

Despite the erosion, the circulation revenue of the Times and other newspapers is still higher that a year ago because the remaining readers are paying more. Higher prices helped lift the first-quarter circulation revenue at The New York Times Co. and McClatchy Co., which owns The Miami Herald and 29 other daily newspapers.

The flurry of price increases underscores just how much the shifting financial landscape has shaken newspaper publishers.

For decades, newspapers were able to rely on steady increases in their ad revenue to cover most of the cost for gathering the news, printing the information and then distributing the copies. A reliable flow of advertising is one reason the Times was able to go from 1999 to 2007 with just one increase in the cover price of its weekday edition.

But ad revenue has been crumbling throughout the newspaper industry for the past three years, forcing newspapers to lay off workers, reduce wages and look for new ways to make money.

So far the revenue gains from higher prices haven't been nearly enough to overcome the advertising drought.

The New York Times Co., which also owns The Boston Globe and 16 other daily newspapers besides its flagship publication, lost $74 million during the first three months of the year as its ad revenue plunged 27 percent from last year. Circulation revenue edged up by 1 percent.

With its newspaper prices rising and ad sales sagging, circulation accounted for 38 percent of the Times Co.'s first-quarter revenue. Most newspaper publishers still rely more heavily on advertising.

The advertising downturn has sent seven publishers with daily newspapers into bankruptcy protection since December and triggered the closure of the Rocky Mountain News in Denver.

Published at 6:52 PM EDT on May 5, 2009 | Updated at 7:00 PM EDT on May 5, 2009